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Centers of shared services and office market

Acronym CZS indicates centers of shared services. Coupled with car factories CZS are major employers of large numbers of people who work in various sectors.

17. 12. 2014

Where are working employees of so-called the greatest shared service centers (CZS)?Which  companies are taking up most biggest offices and how many people are there working? Is Bratislava really only a stop in thr halfway from Košice to Prague? Is renting offices for this type of companies lucrative business? Does CZS impact on quality of life and the economy?

We and they

Time of local government election is coming and future officers are raising crucial questions. In the electoral „shootings“ are heard questions like: Who is a permanent resident, who is foreign citizen, how many students are there in rents (In Bratislava is more than 60,000 university students ) who does increas property prices, who is reducing the cost of labor and so on. Even the one harsh blog post on the subject was able to raise a wave of disapproval. The fact is that the movement from eastern Slovakia to Bratislava, but also further to Prague and to the world is there from the era of socialism and was conditioned not only by business or professional opportunities, but also by the vision of making the Bratislava city for all. A role here played the compulsory military service. Today, when it is abolished has  a great impact on jobs and regional development have so-called shared service centres (CZS). Coupled with car factories are CZS are major employers, who count their employees for hundreds of thousands.

 

Centers of shared services

 In the present trends of CZS belongs building and development of centres of execellence, which are mainly focused of IT. There are several variations of such centers according their their location  as "on-shore" (within the country), "near-shore" (in the near area, eg. in Europe) or "Off-shore" (anywhere in the world, outside the home country or such. outside Europe). Typical imagination of CZS of reader will be probably call-center like from movie Slumdog millionare.

However, the Indians are becoming for Britain or the United States relatively expensive labor force. Why? Upgrade their skills, studying a few square feet in a crowded call-center "does not smell" anymore.

Size counts

For building of CZS are inter alia right enough skilled labor, good knowledge of languages ​​(in India it is English, albeit with a typical accent) and low labor costs. The study of Colliers International says that each city that seeks or already has CZS has a different position from a perspective of expenses and a critical mass, expertise and experience of available employees, thus here decides a size of reservoir of talent (talent pool).

 

It's no secret that it is costs that determine of a creation,removal or cancellation of CZS in the country. Although CZS significantly contributes to employment and education, but only the best CZS achieved turnover rate below 10%. So is it the high rotation of people and in case of cancellation CZS and also the potential risk of mass redundancies. The sweet side is that workers in addition to value creation, spending their income in Bratislava, thus are moving the economy of the city that dares to build new areas of shopping centers (which already (without Bory Mall) account for more than a square meter per head Bratislava). Simultaneously the CZS staff are putting pressure on the quantity and quality of cultural life, social activities. The second question in the absence of permanent residency remains the removal of local taxes and fees.

 

 Shared service centers in Slovakia (CZS)

 Košice: (IBM, T-Systems, AT & T)

Banská Bystrica: (IBM, Orange, O2)

Nitra: (InsData, Crystal Call)

Piešťany: (ON Semiconductor)

 Bratislava: (Allianz, Amazon, Orange, AT & T, O2, Lenovo, Soitron, Henkel, Johnson Control International, IBM, Swiss Business Services, Siemens, Accenture, Dell, Asseco Solutions, Deutsche Telekom, Emerson Network Power, Kone, HP Slovakia, First Data, Mondelēz international, JCI, NESS Slovakia, Eset, T-Com, Crystal Call, PWC...)

Source: SARIO,  Note: it is not a complete list, only illustrative selection only 13 percent

On some buildings is headed "For Rent" for a long time. The market of office space seems to be overloaded in some locations or offices are so inaccessible, remote, expensive and little known that it sits empty. In this case study of Colliers Interantional is says CZS occupies the total area of ​​modern office space in Bratislava only 13% (for comparison Praha has 14% and the top of list is Krakow with 74%).

"Expensive rents and generally expensive real estate, combined with the need mobility to and from work increase the number of vehicles on the road in Bratislava and the situation is particularly in the collisions becomes critical. In terms of real estate shared service centers are located in all districts of Bratislava and mostly at main roadsright for the sake of accessibility, "says Robert Camba CEO portal Kancelarie.sk. Forum Business Centre and the crossroad Bajkalská - Prievozská has developer HB Reavis cancelled,because of the expected traffic jams and easier accessibility of tenatn´s employees. When are traveling 10 employees it's bearable, but if are moving hundreds of people to / from a CZS in morning and afternoon, the traffic situation becomes primary. Especially in terms of comfort.

It is long way to Prague

What happened and happens in Bratislava in terms of shared service centers can be observed now. Consolidation occurs. Moving and expanding. IBM, Telekom, Orange has moved, Johnson Control will move, Mondeléz and also Henkel took more space in BBC1 Plus. Shared service centers to increase their capacities. Bratislava should see further than beyond its borders. Bratislava namely in obtaining and maintaining of CZS has a  strong competitor in the three other major cities. In the game are Vienna, Budapest and Prague, at which we look closer.

Czech is right after Poland second largest market for shared services in Central and Eastern Europe. Currently it has more than 200 CZS, which employ more than 50,000 people. Just in Prague are based SAP, DHL (over 1,000 employees), eBay, Dixons Retail (around 500 people), Edwards, Accenture (around 1,000 people), PwC, HSBC Bank PLC, Johnson & Johnson, Algotech and Centropol. One of the indisputable advantages of Prague is geographic location, because lies far from other major cities (except Bratislava and for the reconstruction of the highway seems even further), and is often chosen  as the seat of investors respectively CZS for Central Europe. The second advantage is the concentration of educated employees with knowledge of at least two foreign languages. This is typically English and German. Although Bratislava is the capital of historically trilingual (Prešporok - Pressburg - Pozsony), fluent Hungarian is more the domain of the natives and also from the mouth of the youth is heard more English than German.

 Since CZS market growths particularly by expansion of existing and well-established centers, two conclusions can be drawn. First, existing CZS will move to a larger (68% CZS companies established within the state only in one city, 19% in two cities), and both will be cities, investors and agencies seek new CZS.

 On a consolidating market will survive only those CZS capable increase in long term a level of qualifications of staff, provide a complex and difficult operations that can´t be replace by automatiozation. Higher qualification also means higher demands on salaries. For comparison SARIO indicates that salaries in shared service centers: the average for Slovakia is at € 1,062 gross and the Czech Republic it is € 1,322. Into play comes automatization of back-office operations, which in practice means that human capital are replaced by automated operation, big data and data centers.

 As we mentioned above, for CZS are crucial costs and thus to Bratislava does not compete with Prague, Warsaw or Krakow and Wroclaw, but much more Romania, Serbia, Ukraine, from exotic countries after India, the Philippines and Argentina. Looking ahead, all will be competd with "artificial intelligence".

Zdroj: Kancelarie.sk, JLL,

Colliers International - Outsourcing and Offshoring in CEE:

A Rapidly Changing Landscape, 2.Q 2014

 

 

 

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